general electric

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders. Below, we update our advice on six ETFs — five buys and one we don’t recommend....

General Electric Co., New York symbol GE, plans to buy back all of the preferred shares it sold to Berkshire Hathaway Inc. (New York symbol BRK.B), the holding company controlled by billionaire investor Warren Buffett. GE sold these shares to Berkshire during the 2008-2009 financial crisis. The cash from the sale helped stabilize GE’s finance division. The company will pay $3.3 billion to buy back these shares. That’s nearly equal to the $3.5 billion, or $0.33 a share, that GE earned in the three months ended June 30, 2011. However, this purchase will save the company $300 million a year in dividend payments....

MCGRAW-HILL COMPANIES INC., $45.29, New York symbol MHP, rose 17% this week after it announced that it will split into two separate, publicly traded companies.

One of these new firms, McGraw-Hill Markets, will sell a variety of financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market-research firm. McGraw-Hill Markets will have annual revenue of $4 billion. International sales will account for 40% of that total.

The other company, McGraw-Hill Education, will publish textbooks for schools and colleges. This business will have $2.4 billion of annual revenue.

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GENERAL ELECTRIC CO. $18 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $190.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.ge.com) is seeing rising demand for consumer and business loans at GE Capital, its finance division. That’s helping the company offset slower growth at its industrial businesses, which make a variety of products, including jet engines, turbines and locomotives. In the three months ended June 30, 2011, GE Capital’s earnings jumped 117.0%, to $1.6 billion from $734 million a year earlier. That helped push up GE’s overall earnings by 10.5% in the quarter, to $3.5 billion, or $0.33 a share. A year earlier, it earned $3.2 billion, or $0.29 a share. Revenue fell 3.5%, to $35.6 billion from $36.9 billion. However, that’s partly because the company sold 51% of its NBC Universal entertainment business in February 2011. If you exclude the impact of this sale, revenue from GE’s ongoing businesses would have risen 7%....

UNITED TECHNOLOGIES CORP. $84 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 908.7 million; Market cap: $76.3 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.utc.com) has six main businesses: Pratt & Whitney makes aircraft engines (24% of 2010 revenue, 25% of profit); Otis makes and services elevators (21%, 32%); Carrier makes heating and air-conditioning equipment (21%, 14%); UTC Fire & Security sells burglar alarms and fire-protection services (12%, 9%); Sikorsky makes helicopters (12%, 8%); and Hamilton Sundstrand makes aircraft controls (10%, 12%). The U.S. government supplied 18.2% of United Technologies’ 2010 revenue, and is its biggest customer.

Top brands keep clients coming back

The company operates in cyclical industries. That adds to its risk. But it owns some of the top brands in its main markets, which helps it attract and retain customers. Moreover, many of its products, such as jet engines and elevators, need constant maintenance. The company now gets 40% of its revenue from ongoing sales of spare parts and services....

SPDR S&P 500 ETF $133.97 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market cap, liquidity and industry group. The index’s highest-weighted stocks are Exxon Mobil, Microsoft, Procter & Gamble, Apple, JP Morgan Chase & Co., Johnson & Johnson, IBM, Chevron, General Electric, Pfizer Inc., Coca-Cola Co. and AT&T. The fund’s expenses are just 0.10% of its assets....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

GANNETT CO. INC. $15 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 240.2 million; Market cap: $3.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.1%; TSINetwork Rating: Average; www.gannett.com) reported revenue of $1.25 billion in the three months ended March 27, 2011. That’s down 3.7%, from $1.3 billion a year earlier. The company is seeing lower advertising revenue at its 82 newspapers, including its flagship paper, USAToday, and its 23 TV stations. That’s mainly because its 2010 revenue benefited from advertising tied to the Olympics and the U.S. mid-term elections. Earnings fell 16.3% in the quarter, to $0.41 a share from $0.49. These figures exclude costs related to job cuts and closing facilities. These moves cut Gannett’s operating costs by 2.2% in the latest quarter. Gannett is a buy....

Northstar Aerospace Inc., $2.45, symbol NAS on Toronto (Shares outstanding: 29.9 million; Market cap: $73.2 million; www.nsaero.com), makes a wide variety of parts for airplanes and helicopters, including gears, gearboxes, rotor shafts and transmissions. The company is based in Chicago, but it has plants in Ontario, Illinois, Indiana and Arizona. Sales to military-related customers, such as the U.S. Department of Defense and Boeing, accounted for 74% of Northstar’s 2010 sales. The remaining 26% came from commercial-aircraft customers, such as General Electric Aviation, Honeywell and Rolls-Royce. In the three months ended December 31, 2010, Northstar’s sales rose 22.3%, to $65.7 million from $53.7 million a year earlier (all amounts except share price and market cap in U.S. dollars). Defense sales rose 17.5%, and commercial sales rose 35.9%....

PLEASE NOTE: Our next Hotline will go out on Thursday, April 7, 2011. EBAY INC., $31.36, Nasdaq symbol EBAY, is buying GSI Commerce Inc. (Nasdaq symbol GSIC) which sells e-commerce services to over 500 businesses. GSI’s customers include major retailers, such as Toys R Us and Aeropostale, consumer-electronics makers, including Hewlett-Packard, and professional-sports leagues, such as the National Football League. GSI helps these clients process and fulfill online orders, and increase their online sales....